As Hiro Muramoto headed out the door of the Tokyo newsroom last week, weighed down with TV equipment on his way to Bangkok to cover demonstrations, he flashed a smile at a Reuters colleague.

It was, she remembers, a “Hiro” smile. It was gentle, rather than a broad grin, and it showed the 43-year-old was pleased once again to take his expertise on the road to do his job telling the world what was going on.

The contrast with his predecessor was clear from the TV coverage. All but one of the major channels in Tokyo carried him live. Leading up to his election drubbing last month, former Prime Minister Taro Aso could not always get his pressers carried live even on national broadcaster NHK.

Yet amid the ritual and grand opening statements, one minister gave an already strengthening yen another kick up, while a second pushed down the shares in Japanese banks — both before they’d been officially announced and sworn into their new jobs.Banking and financial services minister Shizuka Kamei was the first to move markets.A former police official and anti-postal reform rebel, he was a surprise pick for that job with a lack of markets experience leaving analysts scratching their heads as to what he might do.They did not have to wait long as Kamei said he would push for banks to freeze repayments of mortgages and small business loans.That sent Tokyo banking shares down 1.9 percent as investors wondered what it would mean for lenders already struggling after the credit crunch.But the bigger move came in the currency market where the new finance minister essentially endorsed the yen’s run-up to seven month highs against a U.S. dollar already tumbling in global markets.Hirohisa Fujii has long argued that Japan must wean itself off relying so much on a low yen and exports to grow its economy — but on Wednesday he added that he was comfortable with the yen’s recent rise.Markets promptly sent the yen up nearly 1 percent more against the sagging dollar, and his comments will likely hit the shares of exporters when the Tokyo stock market reopens on Thursday.Perhaps these are just examples of the new government’s drive towards politicians making policy, rather than leaving things to the bureaucrats, and Japan will just have to get used to it.Or perhaps the two ministers — both of whom have served in previous cabinets a long time ago — are adjusting to the difference between talking as opposition politicians and pronouncing as ministers with real power.Photo credits (top to bottom): REUTERS/Chris Meyers; Kamei: REUTERS/Yuriko Nakao; Fujii: REUTERS/Issei Kato

Historic is usually a word that makes my skin crawl when I see it in the news. Journalists are prone to overuse it, so when I saw it in our election stories I had to stop myself deleting it — because this election truly is historic.The Liberal Democratic Party had never lost an election since its founding in 1955. Even when it lost power for a few months in 1993/94, it was because of LDP lawmakers defecting rather than an election loss.So the Democratic Party, under prime minister-elect Yukio Hatoyama, has a huge mandate. What will he do with it?It’s clear that the last two elections were votes for a change to the old system where the ruling LDP, big business and bureaucrats ruled the place. Remember the 2005 LDP landslide was led by Junichiro Koizumi running on the destruction of his own party’s pork-barrel history.The question is whether voters also rejected deregulation in the wake of the financial crisis and slumping exports that put large numbers of unprotected contract workers out of work.The Yomiuri newspaper, Japan’s biggest seller, certainly subscribed to that view in its editorial on Monday. Along with the undisputed argument that voters were disgusted with the LDP’s failures, it said the defeat “was brought about by the collapse of its structural reforms that went too far”.

Hatoyama certainly campaigned on that basis, raising eyebrows as he attacked “unrestrained market fundamentalism” in a magazine article that was subsequently translated and published in the New York Times.Attacking markets is not unusual after the financial crisis, particularly in Europe, but Japan is hardly a carbon copy of U.S. free-wheeling capitalism. So it was interesting to see Hatoyama backpedalling a bit even as the votes were being counted and the reality of government set in.”We are not saying that the market principles are all bad,” Japan’s new leader said. “But the current economic situation is one where there need to be corrections in areas where reform went too far.”So the Democrats have cleverly left themselves a lot of room to move Japan in whatever direction they want — from strengthening a threadbare social safety net to ending Japan’s heavy reliance on exports.Whatever they do, they must be more savvy in their marketing than their predecessors.For the LDP, the disgust of voters was so ingrained that even a giveaway of around $130 cash to each voter as part of economic stimulus efforts earned ridicule rather than gratitude.Photo credit: REUTERS/Kim Kyung-Hoon

Japan is edging towards the introduction of independent directors and auditors for publicly listed companies, but so far even the idea of having someone from outside at the top of a company remains a foreign concept.The tradition is for someone to join a Japanese company at age 22 with the ultimate goal of serving on the company board, says Takeyuki Ishida, the head of Japan Research at RiskMetrics Group, which advises institutional investors on how to vote their shares.Such a tradition of insider appointments means that even if the government requires companies to appoint at least one independent director or an independent auditor — as a recent government discussion report suggested — it might be a classic case of Japanese “tatemae” (appearance) rather than “honne” (substance).A reluctant company, faced with such a requirement, might ask their friendly bank or accounting firm to find someone for them — and end up with an ex-staff member, Ishida told the Reuters Japan Investment Summit.Shareholder activism got a shot in the arm in Japan when foreign fund Steel Partners won a proxy battle in May over the management and directors of Aderans, a wigmaker.On the surface, the activism has since gone quiet again but both Ishida and Jun Frank, from rival proxy advisory firm Glass Lewis & Co, say change is happening among investors in Japan.While many investors still return empty ballots, leaving Japanese companies to decide how to vote their shares, the just completed round of annual shareholder meetings did see more tension, they both say.Japanese companies don’t report in detail the results of board elections but both Ishida and Frank say they have heard that this year’s meetings saw higher protest votes.Although the lack of disclosure of voting results, of course, mean there is no way for investors to see that for themselves.Photo credit: REUTERS/Toru Hanai

Needless to say the 4.0 percent contraction in GDP (an annual rate of 15.2 percent, if you speak American) from January to March was not pretty — especially when you see that the pain has spread from Japan’s big autos and tech factories to the broader economy.